Chinese rebar futures hit a 10-month high July 9 as loosening credit restrictions and expectations of strong demand after the passing of severe summer weather boosted buying interest, market sources said.
The most active October contract closed at Yuan 3,726/mt ($532/mt) July 9, up Yuan 24/mt day on day and surging Yuan 106/mt since July 3. Contracts were last higher at Yuan 3,766/mt on August 20, 2019.
The Chinese government relaxing monetary policies, lowering interest rates and increasing in investment in infrastructure in a bid to spur economic activity in the wake of coronavirus lockdowns were fueling the increase, market participants said.
“China rebar demand is expected to increase in September and October [and] monetary supply has increased,” a Hong Kong-based stockist said.
Loans grew by Yuan 10.3 trillion over January-May, Yuan 2.3 trillion more than a year earlier, while the average interest rate for loans to small and micro enterprises fell 42 basis points in the period from the end of 2019.
A pickup in physical demand for rebar was also driving futures higher, market participants said.
Construction activity, which typically slows down in eastern and southern China during seasonal heavy rains, was expected to see some respite from mid-July as conditions eased, while the end of summer should spur a steady recovery in rebar demand from September, mill sources and traders said.
In northern China, construction of the Xiong’an New Area in Hebei province and other projects in the Beijing-Tianjin-Hebei region were keeping demand consistently strong, traders said.
Source:Platts
The opinions expressed herein are the author's and not necessarily those of The Xinde Marine News.
Please Contact Us at：
media@xindemarine.com
.gif)
